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Date

Thursday, July 31, 2025, at 11 a.m. ET

Call participants

  • President and Chief Executive Officer — Kelly Young
  • Chief Financial Officer — Scott Hines

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Takeaways

  • Assets under management (AUM)— $151.1 billion in AUM as of June 30, 2025, representing the highest level in company history.
  • Net client cash flow (NCCF)— $13.8 billion in net client cash flow in Q2 2025 (period ended June 30, 2025), equivalent to 11% of beginning-period AUM, driven by enhanced equity mandates and global equity net inflows.
  • Gross sales— $28 billion in gross sales year-to-date in 2025, surpassing the full-year record of $21 billion set in 2024.
  • Investment performance— 100% of assets in major implementations (global equity, emerging markets equity, non-US equity, small-cap equity, and enhanced equity) outperformed benchmarks over three-, five-, and ten-year periods as of June 30, 2025.
  • Five-year excess return— Revenue-weighted five-year annualized return in excess of benchmark was 4.5% as of the end of Q2 2025; asset-weighted five-year annualized excess return was 3.6%.
  • Percentage of outperforming strategies— Over 94% by revenue and 92% by asset weight outperformed respective benchmarks over three-, five-, and ten-year periods as of June 30, 2025.
  • ENI revenue— $124.9 million in ENI revenue for Q2 2025, a 15% increase from Q2 2024, attributed primarily to management fee growth.
  • Management fees— Rose 16% from Q2 2024.
  • ENI operating margin— Increased 360 basis points to 30.7%, up from 27.1% in Q2 2024.
  • Operating expense ratio— Decreased 420 basis points to 44.6%, versus 48.8% in Q2 2024.
  • Variable compensation ratio— Decreased to 45.4% from 48.2% in Q2 2024.
  • ENI diluted EPS— ENI diluted EPS was 64¢, up 42%.
  • Adjusted EBITDA— Adjusted EBITDA was up 22%.
  • US GAAP net income— US GAAP net income attributable to controlling interest declined 8%, due to higher noncash employee equity plan expenses.
  • Shareholder capital returns— 900,000 shares repurchased in 2025 for $23.6 million at a volume-weighted average price of $25.48 per share.
  • Dividend declaration— Interim dividend of one cent per share, payable on September 26, 2025 to shareholders of record as of September 12, 2025.
  • Leverage and liquidity— Debt to adjusted EBITDA ratio was 1.0x and net leverage ratio was 1.1x as of June 30, 2025; $90.2 million in cash and $95.2 million in seed investments as of July 31, 2025.
  • Client base— 43% of AUM managed for non-US clients as of Q2 2025, up from 37% in Q1 2025.
  • Share count reduction— Outstanding diluted shares decreased 58% since Q4 2019 (from 86 million to 35.9 million as of Q2 2025).
  • Guidance— Fiscal year 2025 ENI operating expense ratio is expected to be 45%-47%, and variable compensation ratio of 43%-47% for fiscal year 2025, contingent on equity market levels at Q2 2024 end.
  • Product pipeline themes— Enhanced and extension mandates described as "front and center" drivers; pipeline remains diversified across strategies, channels, and geographies.

Summary

Acadian Asset Management(AAMI -3.28%) reported record AUM of $151.1 billion and net client cash flows of $13.8 billion in Q2 2025 (period ended June 30, 2025), supported by diversification in client domicile and strong uptake in enhanced equity mandates. Management cited a robust and diversified pipeline, with major funding momentum seen in both enhanced and core strategies during the quarter. The company improved operating leverage, with lower ENI operating expense and variable compensation ratios contributing to a higher ENI operating margin and strong ENI EPS growth. Shareholder returns included ongoing buybacks during 2025, a newly declared dividend payable on September 26, 2025, and a reduction in leverage facilitated by high cash balances as of June 30, 2025. Operating focus remains on further broadening distribution, scaling through product expansion, and closely managing the expense base to maintain margin expansion as the company grows its global client footprint.

  • Kelly Young said, "the majority of our gross sales in Q2 2025 were driven by enhanced-type mandates," underscoring product mix impact for quarterly flows.
  • The quarter included one "particularly large account" that both increased net flows and shifted non-US client AUM from 37% in Q1 2025 to 43% by period end.
  • Scott Hines noted, "Our debt to adjusted EBITDA ratio was one time as of June 30, 2025," providing context on the company's capital structure and liquidity focus.
  • Expense management, including discipline in adding distribution resources and infrastructure, contributed to margin improvement and was cited as a key operational focus.

Industry glossary

  • NCCF (Net client cash flow): Net inflow or outflow of client funds into company-managed portfolios during a period, directly impacting AUM growth.
  • ENI (Economic net income): Company-specific measure reflecting operating performance, excluding non-cash and non-operating items, and preferred for internal management reporting.
  • Enhanced equity: A systematic investment strategy aiming to deliver outperformance over benchmarks through quantitative factor-based techniques.
  • Extension mandate: An investment strategy allowing managers to increase exposure to both long and short positions, usually beyond the traditional 100% long-only format.

Full Conference Call Transcript

Kelly Young, our president and chief executive officer, will lead the call. And now I'm pleased to turn the call over to Kelly.

Kelly Young: Thanks, Melody. Good morning, everyone, and thank you for taking the time to join us today. At the beginning of 2025, when I delivered Acadian Asset Management's inaugural earnings presentation, we laid out an organic growth strategy for Acadian based on targeted product and distribution initiatives. Since then, our team has been executing that growth strategy, and I'm excited to share our Q2 2025 results with you. As we've achieved certain milestones during this quarter, Acadian is the only pure-play publicly traded systematic manager. Founded in 1986, Acadian has pioneered systematic investing, and we continue to lead in the space through innovation. We have delivered sustained outperformance across various strategies and through numerous market cycles.

We manage $151.1 billion of AUM, and Acadian is a pure systematic manager applying data and cutting-edge technology to the evaluation of global stocks and corporate bonds. 95% of our strategies by revenue are out benchmarks over five-year periods, with a 4.5% annualized excess return. Our competitive edge comes from the convergence of talented people, rich data, and powerful tools. We have a 120-person investment team with over 100 advanced analytics degrees. We're implementing products and distribution initiatives to drive sustainable growth. Slide four showcases Acadian's Q2 2025 strong performance.

Our US GAAP net income attributable to controlling interest was down 8%, and EPS was down 3% compared to the prior year due to an increase in noncash expense related to higher employee equity plan revaluations. Our ENI diluted EPS of 64¢ was up 42%, and adjusted EBITDA up 22%, both driven by significant revenue growth. We delivered $13.8 billion of positive net client cash flow in 2025, 11% of beginning period AUM, the highest in the firm's history. And AUM surged to $151.1 billion as of 06/30/2025, the highest in Acadian's history and a major milestone for the company. Acadian's investment performance track record remains strong despite continued market volatility.

We have five major implementations which comprise the majority of our assets. As of 06/30/2025, global equity, emerging markets equity, non-US equity, small-cap equity, and enhanced equity have 100% of assets outperforming benchmarks across three, five, and ten-year periods. In Q2 2025, global equity markets were strong though still volatile. The quarter had a turbulent start with a large sell-off in equities, but as volatility subsided, equity markets around the globe saw a sharp recovery. Higher returns in European and emerging markets were partly driven by dollar weakening and investments outside of the US, which provided significant diversification benefits for our clients' portfolios. Our disciplined systematic investment process has generated meaningful long-term alpha for our clients.

Our revenue-weighted five-year annualized return in excess of the benchmark was 4.5% as of the '2, on a consolidated firm-wide basis. Our asset-weighted five-year annualized return in excess of the benchmark was 3.6% as of the end of the quarter. By revenue weight, more than 94% of Acadian's outperformed their respective benchmarks across three, five, and ten-year periods as of 06/30/2025. And by asset weight, more than 92% of Acadian strategies outperformed their respective benchmarks across three, five, and ten-year periods. Next, I would like to focus on Acadian's extensive global distribution platform, which helped us achieve strong gross sales and will be a major driver of growth in the years ahead.

For many years, Acadian has had a strong global presence, with four offices in Boston, London, Sydney, and Singapore. We've continued to expand our client and distribution team, with over 90 experienced professionals serving more than a thousand client accounts in 40 countries. The team has established strong, deep relationships with many clients, and our average relationship length with the top 50 clients was over ten years. We work with over 40 investment consultants across market segments and geographies, leading to a diverse client base invested across multiple strategies. We had $28 billion of gross sales in 2025, already surpassing our previous record annual sales of $21 billion in 2024.

In tandem with expanding our distribution capabilities, Acadian's business and product development team have been focused on increasing our strategy and vehicle offerings in high-demand and growing areas where Acadian's systematic approach is particularly well-suited. Our current pipeline remains robust. The success of Acadian as a highly regarded institutional investment manager is a testament to our proven investment process, as well as Acadian's world-class investment and distribution teams. We have six clients among the top 20 global asset owners, and 26 clients among the top 50 US retirement plans. More than 40% of our assets are from clients invested in multiple Acadian strategies. Our client base is diverse, with 43% of assets managed for clients outside of the US.

We offer 80 plus institutional quality funds for investors. We achieved $28 billion of gross sales in 2025 and reached $151 billion of AUM as of 06/30/2025. The next slide highlights a positive trend in Acadian's net flows, showing a significant increase from the $1.8 billion in the full year of 2024 to $17.6 billion in the year-to-date 2025. We realized positive net flows of $13.8 billion in Q2 2025, which is 11% of beginning period AUM, driven by a new enhanced equity mandate and global equity net inflows, the highest quarterly NCCF in Acadian's history.

With two positive quarterly net flows in 2025, totaling $17.6 billion, along with $1.8 billion in the full year 2024, we've now generated six consecutive quarters of positive net flows. I'm now going to turn the call over to our CFO, Scott Hines, to provide you with some more detail on our financial performance this quarter and an update on capital allocation.

Scott Hines: Thanks, Kelly. Turning to slide 11, our key GAAP and ENI performance metrics are summarized here. As previously noted, we manage the business using ENI metrics, which better reflect our underlying operating performance. You can find complete GAAP to ENI reconciliations in the appendix. Let me now turn to our core business results. Starting on Slide 12, Q2 '25 ENI revenue of $124.9 million increased from Q2 '24 by 15%, primarily due to management fee growth. Management fees increased 16% from Q2 2024, reflecting a 20% increase in average AUM driven by strong positive NCCF and market appreciation. Moving to slide 13.

In Q2 '25, our ENI operating margin expanded 360 basis points to 30.7%, from 27.1% in Q2 2024, driven by increased ENI management fees. Our Q2 2025 operating expense ratio fell 420 basis points to 44.6% for the period, from 48.8% in Q2 2024, reflecting the impact of improved operating leverage. Our Q2 2025 variable compensation ratio decreased to 45.4% in Q2 2025 from 48.2% in Q2 2024. We now expect that for fiscal year 2025, our operating expense ratio will be approximately 45% to 47% if equity markets remain at Q2 2024 end levels. The full-year variable compensation ratio is now expected to be approximately 43% to 47%. Turning to slide 14 on capital management.

Consistent with our disciplined approach to maximizing shareholder value, we continue to orient our strong free cash flow toward organic growth initiatives and then returning capital to shareholders. A robust balance sheet also provides flexibility to optimize our capital structure and enhance returns. At the end of 2025, we had $90.2 million in cash and $95.2 million in seed investments. Debt includes an outstanding balance on our revolving credit facility of $20 million, reflecting draws to support first-quarter seasonal bonus payments, that is expected to be fully paid down by year-end. Our debt to adjusted EBITDA ratio was one time as of 06/30/2025, while our net leverage ratio was 1.1 times.

Acadian Asset Management's board declared an interim dividend of a penny per share to be paid on 09/26/2025 to shareholders of record as of the close of business on 09/12/2025. Moving to slide 15. We have a track record of creating significant value through share buybacks in recent years. Outstanding diluted shares have decreased 58% from 86 million shares in Q4 '19 to 35.9 million in Q2 '25. Over the same period, $1.4 billion in excess capital was returned to stockholders through share buybacks and dividends. During 2025, we repurchased 900,000 shares or $23.6 million of stock at a volume-weighted average price of $25.48.

We expect to continue generating strong free cash flow and deploying excess capital over time that maximizes shareholder value. I'll now turn the call back over to Kelly.

Kelly Young: Before going into Q&A, I'd like to recap the key points covered in this presentation. We're the only pure-play, publicly traded systematic manager. We have a nearly forty-year track record with a competitive edge in systematic investing. Our investment performance track record remains strong with more than 94% of strategies by revenue outperforming over three, five, and ten-year periods. We delivered outstanding performance in '25, with record NCCF of $13.8 billion, the best quarterly net flows in the firm's history. Record AUM of $151.1 billion as of the end of Q2. Q2 2025 ENI EPS up 42% from 2024. And Q2 2025 operating margin expansion to 30.7% from 27.1%.

We will continue to drive growth through targeted distribution initiatives and new product offerings. Acadian is well-positioned to generate value for shareholders. Our team's focus, talent, and hard work have been instrumental in achieving these milestones. And I look forward to building on this momentum and driving further growth and innovation. And this concludes my prepared remarks.

Operator: At this time, those with questions should lift their phone receiver and press star followed by the number one on their telephone keypad. To cancel a question, press star 1 again. Your first question comes from the line of Kenneth Lee with RBC Capital Markets. You may go ahead.

Kenneth Lee: Hey, good morning. Thanks for taking my question. Wondering if you could provide a little bit more color as to the composition of the institutional pipeline as it stands right now? I think in the past, you've talked about enhanced equity as well as equity extension being pretty foundational. Thanks.

Kelly Young: Morning, Ken. Nice to speak to you again. Yeah. The pipeline continues to look very robust. As you noted, enhanced and extensions have both been very key features of the pipeline and of fundings year to date. It looks very robust, I'd say, across different strategies, different domiciles, but certainly with enhanced and extensions being key themes alongside our core strategies and core equity offerings. So I'd say the partner is not just robust but diversified and, you know, by channel, and by client geography.

As you will have seen from a record in CCF in Q2 and a very strong in CCF in Q1, we've obviously been able to move those awarded mandates to funding through the first part of this year, but the team is continuing to replenish the pipe we've been able to do that. So, again, continues to be very robust and very broad, but with, as you say, those enhanced and extensions, product initiatives certainly being sort of front and center over the last couple of quarters.

Kenneth Lee: Great. Very helpful there. And just one follow-up if I may. In terms of capital management, any updated outlook around capital returns in terms of repurchases for the remainder of the year? And then somewhat relatively what are any thoughts around excess cash position at this point? Thanks.

Scott Hines: Hey, Ken. Thanks. It's Scott. Good to hear you again. Look. What I'd say is, you know, we're very much remaining committed to returning excess capital to shareholders over time. Right? And our track record, including this quarter, reflects that. Having said that, we're obviously forward-looking and we want to ensure we're building the most durable and resilient balance sheet that we can, one that supports the business through a range of environments. So as always, we'll be thoughtful and balanced in how we're deploying capital, you know, quarter to quarter. Does that make sense?

Kenneth Lee: Yep. That makes sense. That makes sense. Great. Well, very helpful, and thanks again.

Scott Hines: Thanks, Ken.

Operator: Your next question comes from the line of Michael Cyprys with Morgan Stanley. You may go ahead.

Michael Cyprys: Hey. Good morning. Thanks for taking the question, and congratulations on the strong quarter. Maybe just starting out on the strong flows, $13.8 billion. Significant record for you guys. I think you mentioned a number of strategies that helped contribute. I was hoping maybe you could unpack the composition with a little more detail in terms of maybe how much came from each of the major strategies that contributed. Was it from a single client or two? Maybe help unpack the breadth that you're seeing from the number of clients that participated, or that drove a lot of that activity.

And then if you could just maybe update us on some of the range of new product initiatives that you guys have in mind that we could see come to the market in the next twelve, twenty-four months? Thanks.

Kelly Young: Morning, Mike. It was nice to speak to you again. Yeah. Our two key positive in CCF, I think, reflects the success, in particular, of our enhanced equity product initiative. There was also a lot of particular interest in our core product offerings, particularly our global core offering in the second quarter. I think, you know, we're continuing to see demand for enhanced equity given they offer this attractive risk-adjusted return profile that I know we've talked about in the past. And I think it satisfies broad investor need for lower fee and more consistent return characteristics. So, certainly, the majority of our gross sales for Q2 were driven by enhanced type mandates.

But as I say, noting strong interest in global core as well in Q2. The new account we did have one particularly large account that was, I'd say, outsized by historic standards. That was, you know, one of the certainly one of the larger drivers of that $13.8 billion NCCF number. What's nice to see about that mandate is it continues to diversify our client base. Not just by product type, but also by client domicile. Shifting our non-US domicile clients, percentage of AUM from 37% in Q1 to 43% at the end of Q2.

So certainly a larger account that funded this quarter, but I think it also underscores what we've seen for a long time and that I noticed in my prepared remarks that we continue to see some of the largest and most sophisticated investors globally continuing to put their trust in Acadian in terms of managing their assets. So Q2 at NCCF was extraordinary. We wouldn't necessarily anticipate that same level of net sales in future quarters. But as I noted, the pipeline remains very strong, across all of those dimensions, channel, and geography. But, certainly, I'd say, enhanced was, you know, continues to be the dominant theme in Q2 in the way that it was in Q1.

And perhaps maybe I'll just comment as you noticed on the product initiatives. Again, we remain very focused on the initiatives that we laid out at the beginning of this year, enhanced is obviously one of those, one of those four blocks as well as extensions and credit. I think those initiatives alongside a very strong core offering provide a really robust lineup of strategies that we believe cater to our clients' needs today. So, very much gonna be continuing to execute on those initiatives that we laid out at the beginning of the year.

Scott Hines: And, Mike, it's Scott. I'll just jump in real quick here. Think in regard to the product initiatives already announced, one thing I'd add and something we're very focused on is the scalability of the business. Right? So everything that Kelly's talked about I think as we've talked to you on prior occasions about seed investments largely are in place, infrastructure is largely in place. So we're beginning to feel that. You saw it some this quarter and the expansion in our operating margin and the decline in the operating expense ratio. So we're managing that very carefully. And we're optimistic in this regard going forward as the franchise continues to scale up.

Michael Cyprys: I guess as a follow-up question, and that's probably a good starting point just around operating leverage and just how to think about that. I know it's probably too early for 'twenty-six guidance, but just curious as you look out over the next couple of years, where could this margin profile you're saying get to? Is there some sort of upper ceiling? How do you think about as you're winning more business and customers, the need for investments in the How do you think about that pace of expense growth to help drive and support the growth of the top line and the overall business? What that means for the bottom line margin. Thanks.

Scott Hines: Yeah. I appreciate it, Mike. You know, what I'd say is this. Again, we're very focused on this. We're very focused on continuing to drive operating leverage in the business. We're optimistic about our ability to continue to do so. As you said, this is an area on a 2026 basis that we're going to provide guidance now. What I would point you to, in particular, you look at that ENI operating expense ratio, which to me is one of the best measures of the pure scalability. Right? That's the operating expenses divided by the management fees. And stable in that regard.

In recent years, the company's printed something in around 50%, whereas this year, you'll see it in the deck as we laid out, you know, we're thinking that we could land something closer to 45% to 47% this year. So material progress in that regard. So I don't know that we are prepared yet to range bound this. But as I said, we are narrowly focused on this and optimistic.

Michael Cyprys: Great. Thank you.

Operator: Your final question comes from the line of John Dunn with Evercore. You may go ahead.

John Dunn: Hi. So you guys kinda talked about that investment strategy side. But as you evolve the business, are there any new channels of vehicles you might look to try to tap into more broadly, any just new tax you'd look to take on the distribution side?

Kelly Young: Hi, John. Nice to speak to you again. You know, as I said, I think in terms of our existing product initiatives, I do think we have a very broad range that's suited not just to our more traditional institutional business. But, you know, we have seen a pickup of real interest in a very focused area for us around wealth and sub-advisory. So, again, I do think that the areas like enhanced, like our extension could play particularly well in that sort of space. We also have had a real focus on expanding our vehicle offering and making sure that our vehicles are suitable not just for US and non-US clients, but particular by particular client types.

So, for example, understanding the dynamics of the move from defined benefit to defined contribution and being able to offer CITs for those types of retiree clients. So, again, I think we feel very comfortable where we are today. We have, very selectively, I would say, added some distribution resources through the first part of this year, bolstering what I think was already a very, very strong team.

So I think to Scott's earlier point from a scalability standpoint, we feel very comfortable with the product range and the team that we have in place today and again think that it suits that for our more sort of traditional core business as well as, you know, some of these newer channels.

John Dunn: Got it. And then maybe could you just talk a little bit about the kind of push and pull on the fee rates from what's been inflowing and what's been outflowing and just maybe the outlook for the fee rate in the second half.

Scott Hines: No, John. I appreciate the question. I mean, look. I think as you know, there's a lot of forces at work here, many of which are external. Including just broader market moves and client demand. So the fee rate, we're obviously paying attention to that. We're sensitive to it. But any given quarter, you know, it's largely an output, and it's very dynamic. Right? I think as Kelly suggested, and as you know, you know, we had a relatively large enhanced win, you know, this quarter. And that's begun to be felt. The future was we stare at the pipeline. You know, it can be a lumpy business.

And there's certain pieces there that we're staring at, that for all intents and purposes have a higher fee rate that might be implied by the current quarter, and there are certain other wins that might be just a little bit lower. So this is something that is dynamic and that moves around a bit. What we are focused on as a management team is what we can control in this regard. And as Kelly just suggested, at the first part of your question, it's that focus on making sure we've got the right product initiatives, that we're meeting, you know, the right client demands, and that feels good right now.

And that we're continuing to maintain that expense discipline that I spoke about earlier.

John Dunn: Got it. Thank you. And congrats, Scott, on your first call as CFO.

Scott Hines: Thank you.

Operator: This concludes our question and answer session. I would like to turn the conference call back over to Kelly Young.

Kelly Young: Great. Thank you, everyone, for joining us, and I hope you all have a great day.